The Bank of England has suggested interest rates could rise as early as November in a bid to curb inflation.

The Monetary Policy Committee (MPC) voted 7-2 to keep rates on hold at 0.25 per cent, but indicated that an increase was imminent.

People with savings accounts might welcome the news, but a rise in rates usually means an increase to mortgage repayments. Homeowners with tracker mortgages, where repayments change in line with the bank's base rate, will be made worse off if there is an increase in interest rates.

However, a rate rise is likely to strengthen the pound, which will mean cheaper holidays for Britons travelling abroad. The sterling bounced by one per cent to $1.3347 and €1.1214 in the wake of the MPC meeting.

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Jon Stewart, partner at law firm TLT in Bristol, questions whether interest rates will actually rise, saying it will depend on what happens between now and the MPC meeting in November.

“It is by no means certain that the current trajectory of inflation (CPI currently 2.9 per cent) will continue. The rise in inflation has largely been fuelled by higher commodity prices and sterling's depreciation on import costs, both of which are external pressures.”

He points out consumer confidence remains very fragile and believes manufacturers and retailers will find it difficult to pass higher costs onto consumers.

“Add to that the huge uncertainties surrounding Brexit and it may appear that the MPC is overstating its intent. Even if rates do rise in November, it will be a gradual curve and, given regulatory changes requiring banks to assess affordability in their lending criteria, this should dampen the impact of such a rise on consumers.

“We have already seen an initial strengthening of sterling, particularly against the dollar, which is bad news for exporters but good news for holiday makers.”

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“Much of our debt is locked in on long-term fixed rates which were negotiated when rates were at an all-time low so we are insulated from the impact from that respect.

“The noise around the rate rise yesterday has had an effect on strengthening the pound which, if it sticks, will mean the price of raw materials and machinery, which all comes from Europe, will improve with a better sterling-to-euro exchange rate.”